Data from the Korea Financial Investment Association showed Monday that six out of the 23 foreign asset management firms operating in Korea reported losses during the second quarter of the year.
They included Goldman Sachs Wealth Management, which posted an operating loss of 3.15 billion won ($2.7 million) during the April-June period. As its deficit deepened from 263 million won over the same period last year, the U.S.-based firm has decided to close down its business in Korea.
CBRE Global Investors fell into the red with a 286 million won deficit, down from a net profit of 184 million won a year earlier.
The other four players with losses were PineBridge Investments, Ascendas Asset Management, Nomuraifa Asset Management and Franklin Templeton Investment Trust Management.
JPMorgan Asset Management saw its operating profit stay at 1.2 billion won over the period, down 40 percent from the previous year. Allianz Global Investors Korea suffered a 25.6 percent drop.
According to the KFIA data, the 23 foreign asset managers in the country saw their collective operating profit come to 20.9 billion won in the second quarter, down 6.3 percent from the April-June period of 2012.
Sagging earnings by foreign managers in the local market is attributable to their products with weak flexibility to tackle the prolonged economic slump, said some market insiders.
Further, the firms are faced with double regulatory rules from Korea and their home countries, they said.
In contrast, 62 South Korean asset managers posted a combined operating profit of 108.4 billion won in the same period, up 32 percent from a year earlier.
Financial authorities about a year ago ousted Wise Asset Management from the sector after the company failed to recover from the losses from ill-advised option trades in November 2010. While Wise was the first to go, it may not be last, according to research analysts.
Income from commissions and stock market funds have decreased dramatically as worsening global conditions erode economic activity.
Polarization in the industry has also intensified as the top five players, led by Mirae Asset Management, made up 70 percent of the industry’s profit.
By Kim Yon-se (
kys@heraldcorp.com)
